UAL : Expecting a minimum of 30% move
Technical Analysis
The price has touched the lower trendline of the internal structure, and there is a high probability for a move of about 30% to the nearest target levels. Moreover, if the outer structure creates a larger channel, then, to the upper trendline of the channel, there is a move of about 60%. So, all in all, the risk is worth the reward.
Only 1.25% of the capital is involved at the current levels, and I will consider adding to the position if the price crashes further to the lower trendline of the HTF structure. If that happens, then I'll look more into the fundamentals of the stock, as well as the macro and microeconomics at that time, before acting on any further.
Fundamental Analysis
The airline industry is a key requirement for the growth of any economy. So, the government will also aid this sector if it is in trouble, and we have seen that happening many times before, even during the recent pandemic. Since the pandemic is over, I don't think there are any more hurdles left for the sector going forward, other than recession worries. But from the recent CPI and NFP data, we can expect that the recession is under the Fed's control for the moment.
There are some issues going on with the pilots' association, and even if that escalates, I don't think it is going to affect the long-term growth of the company. Maybe it will provide an opportunity to accumulate more of the stock at a cheap valuation.
Among airline stocks, only 4 stocks are of interest to me as of now, and UAL tops the list. Then comes LUV, DAL, and AAL.
The management is very confident about the business, and also, summer is a pretty good time for the airline business. So, the results of this quarter are going to be pretty good, and by the time they get announced, it will be priced into the share price, and the move would have started. So, I want to be involved in that move early on.
Conclusion
So, all in all, I do believe that the risk is worth the reward. I will assess more about the sector and the stock if any further deep crash happens and will update underneath if I take any further action based on it.
At the moment, 1.25% of capital is involved at the current levels as mentioned in the chart.
The price has touched the lower trendline of the internal structure, and there is a high probability for a move of about 30% to the nearest target levels. Moreover, if the outer structure creates a larger channel, then, to the upper trendline of the channel, there is a move of about 60%. So, all in all, the risk is worth the reward.
Only 1.25% of the capital is involved at the current levels, and I will consider adding to the position if the price crashes further to the lower trendline of the HTF structure. If that happens, then I'll look more into the fundamentals of the stock, as well as the macro and microeconomics at that time, before acting on any further.
Fundamental Analysis
The airline industry is a key requirement for the growth of any economy. So, the government will also aid this sector if it is in trouble, and we have seen that happening many times before, even during the recent pandemic. Since the pandemic is over, I don't think there are any more hurdles left for the sector going forward, other than recession worries. But from the recent CPI and NFP data, we can expect that the recession is under the Fed's control for the moment.
There are some issues going on with the pilots' association, and even if that escalates, I don't think it is going to affect the long-term growth of the company. Maybe it will provide an opportunity to accumulate more of the stock at a cheap valuation.
Among airline stocks, only 4 stocks are of interest to me as of now, and UAL tops the list. Then comes LUV, DAL, and AAL.
The management is very confident about the business, and also, summer is a pretty good time for the airline business. So, the results of this quarter are going to be pretty good, and by the time they get announced, it will be priced into the share price, and the move would have started. So, I want to be involved in that move early on.
Conclusion
So, all in all, I do believe that the risk is worth the reward. I will assess more about the sector and the stock if any further deep crash happens and will update underneath if I take any further action based on it.
At the moment, 1.25% of capital is involved at the current levels as mentioned in the chart.
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